Patience is Your Friend

October 19, 2023

In late 2007 and into 2008, the housing system broke, the stock market imploded, and the banking system cracked. The S&P 500, which peaked at 1,565.15 in October of 2007, fell to 676.53. That’s a 57% drop, in case you were wondering.

I’ve been advising investors since 2002. After the financial crisis of 2007 and ‘08, many investors reached out to me, expressing how badly they wanted to sell their market-based investments and move to something safe. They couldn’t stomach the losses. I asked them time and time again to be patient and let things sort themselves out. Many just couldn’t stand it. They wanted out. They sold their market-based investments at a steep loss. Some agreed to hold out until they got their value back from their 2007 peak. Others held on, hoping for better times ahead.

The S&P recovered its 2007 value by 2012. By 2019, it had doubled that 2007 value. By 2021, it had tripled. Investors that understood their time horizon and were disciplined enough to weather the 2008 storm were in a position to earn tremendous rewards over the next 15 years. Those that left the market all together missed out on one of the biggest bull market runs in American history.

The stock market is a place for patience and discipline. Those that have both can earn tremendous long-term gains. Don’t forget that. Yes the S&P is below its peak from 2021. Your investments may have lost some value in the last 12 months. Before you panic and sell, however, ask yourself two questions:

1. Do you have time to wait?

2. Can you remain disciplined in the face of short-term investment performance?

This is the primary reason why we at PFC are very careful to gage your appetite for risk, and your time horizon for investing. We ask the important questions so we can tailor your investment portfolio to your time and risk needs.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.